Apple is poised to acquire music-recognition app Shazam in a $400 million deal that would strengthen its own music services, according to numerous press reports.
The iPhone maker could announce a deal as soon as today, according to the TechCrunch news site, which broke the first report about an imminent takeover late last week.
Based in the UK, and founded way back in 1999, Shazam Entertainment Ltd. is the perfect digital accessory for anyone who has ever strolled into a coffee shop or department store and wondered what song is playing in the background. Upon activation, the app can recognize many thousands of tracks after just a few seconds, and provide links to other digital services that stock them.
It receives a small commission every time a user clicks through to Apple Music, Spotify or another app to purchase a track. With ownership of Shazam, Apple would be able to save on those commission payments. It could also stop referring users to rival sites.
Apple Inc. (Nasdaq: AAPL) might also feel that Shazam's technology expertise can be used in the development of other products. The UK company is seen as a pioneer in the field of artificial intelligence (AI), the latest battleground between the Silicon Valley giants. The likes of Amazon.com Inc. (Nasdaq: AMZN), Google (Nasdaq: GOOG), Microsoft Corp. (Nasdaq: MSFT) and Facebook are acquiring AI startups simply to get hold of the talent within those organizations.
Even so, the price tag that has been listed in press reports is significantly lower than the $1 billion valuation that Shazam is said to have attracted during its last funding round in 2015.
TechCrunch reports that Shazam has raised a total of $143.5 million in funding from investors including Kleiner Perkins, DN Capital, Sony Music and Universal Music. It passed 1 billion downloads in 2016, when it reportedly made £40.3 million ($54 million) in revenues and a pre-tax loss of £4 million ($5.4 million).
Apple, meanwhile, is trying to bolster its own music service in the face of competition from Sweden's Spotify, which is far bigger in terms of its user base.
In September, Spotify was reported to have more than 140 million subscribers, including 60 million who pay for its service. Apple then had around 30 million.
— Iain Morris, News Editor, Light Reading